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What ales Labatt

Beer giant takes ad swipe at Carlsberg after brewing deal goes flat


For those of us with Heineken taste but a Steeler budget, Carlsberg has been one of those dependable brands that score well on the TPH (taste/price/anti-hangover) index. But these days fewer pubs, bars and restaurants are serving the Danish treat after it severed its ties with Labatt, the brewing behemoth that until recently held the licence to brew Carlsberg in Canada.

Despite all the mouth-music about the split being "amicable," Labatt was quick to fire a few bruising uppercuts to Carlsberg's beer belly with a string of print ads in local papers last month.

"The Carlsberg you know has become the Carlsberg you knew," trumpeted the ad, before telling readers that Carlsberg is being brewed by "different brewers" (read inferior brewers).

The ad goes on to say that "302 Ontario pubs, bars and restaurants (have) opted to stop selling the 'new' Carlsberg" to show their support for Labatt.

Strange behaviour for a company that says it's not at all miffed to lose brewing and distribution rights to a beer it says wasn't selling anyway.

Still, Carlsberg's $37 million in annual beer sales is nothing to sniff at. And whether it was Labatt that put pressure on the aforementioned "pubs, bars and restaurants" to stop selling Carlsberg lest they be cut off from Labatt's products is a matter of some debate. The server at my local watering hole suggests as much when I order me up a Carlsberg.

"No can do," she says. "Some fuckin' distribution thing going on."

Officially, Nigel Miller, Labatt Canada director of public affairs, says, "The rationale (for the ad) was to let beer drinkers know that Labatt is not brewing Carlsberg any more and to thank customers who decided to replace Carlsberg with another Labatt product."

But as one of the wonder twins hauling in roughly 90 per cent of Canadian beer sales in a combined duopoly with Molson, Labatt has a rep for playing hardball with the competition, no matter how small.

Only last April, Canada's Competition Bureau concluded a two-year investigation into allegations of anti-competitive behaviour by Labatt and Molson against several Quebec microbreweries.

Although no formal charges flowed from that probe, the Competition Bureau found validity in complaints levied by l'Association des Microbrasseurs du Québec that "a number of (Molson and Labatt) clients are bound by potentially anti-competitive contract clauses," including restrictions on competitors, exclusivity clauses for their products, preferences for shelf-space and preferred positioning, and restrictions that require establishments to sell certain Labatt and Molson brands at the same price as their competitors.

Unfortunately for the micros, all that "did not substantially lessen or prevent competition in the beer industry."

Indeed, one of the reasons Carlsberg decided to cut ties with Labatt is because the company wasn't doing enough to market the brand in Canada.

On the blower from the Carlsberg mothership in Copenhagen, director of public affairs Margrethe Skov suggests litigation is now afoot.

"Those ads," Skov says, "seem a very strange way of ending what was a very good collaboration."

Indeed, she charges that the ads themselves blurred the truth.

"They neglected to mention that quality is what guides us. A Carlsberg is a Carlsberg. It's our recipe, it's our yeast, and we control the process – never mind who brews it, anywhere in the world."

Pankaj Aggarwal, assistant marketing prof at U of T's Rotman School, says the ad seemed designed to inflict long-term damage to the Carlsberg brand and "alter the perception of that brand, by suggesting 'something' is different now. Carlsberg's new marketing efforts in Canada must be prepared to counter the effects of this campaign."

Carlsberg is currently flogging itself as "probably the best beer in the world."

But Ryerson marketing prof Rob Wilson says, "I don't think Carlsberg will ultimately suffer or benefit one way or the other," since it's no longer a high-profile beer.

For Labatt's part, Miller says, "We're not looking to do any more ads. All of us compete aggressively for every bit of market share in Canada. It was a one-time thing that served a purpose. Beer drinkers ultimately decide what they want to drink."

Over at Moosehead, Carlsberg's new brewer and Canada's oldest independent, spokesperson Joel Levesque is reluctant to play Labatt's rain-beer games.

"We have a reputation as one of the best brewers in the country. We're just caught in the middle."

But at my local watering hole, I still can't get a Carlsberg. The brew is also not being stocked in many LCBO outlets – also, no doubt, at their own discretion.  

the end

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NOW Magazine Online Edition, VOL. 23 NO. 29
Mar 18 - 24, 2004
Copyright © 2004 NOW Communications Inc.
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